The latter is true, but you can perceive frame time jitter on subconscious level (it just feels wrong, even though you can't say why at first). Hence, it's best to have stable frame time even if a bit higher, than jitter all over the place, even if on average much lower. That said, only top trained e-sport young players can say lowering frame time gives them some advantage - for most people it doesn't matter much, aside what I said above.
Personally, I am happy with stable 90+ FPS most of the time, as 60 feels already not fluid enough and 75-80 is getting there, but 90+ is really nice. Anything above 100 is... eh... nice? Just, not sure why.
That's on OLED screen with really low latency of pixels, that is. Much slower IPS (and even worse most VA) won't even show any real difference with high refresh rate, as it's just too slow to react anyway. However, high FPS sell very well!